Gasoline Prices Don’t Look As Bullish On The Charts With Only 3 Trading Days Left, Hurricane Franklin Reached Category 4 Status

Refined product prices came back to earth Monday after the tank fire at the Garyville LA refinery that sent prices soaring on Friday was finally extinguished with reports suggesting that no damage was done to operating units at the refinery. 

The 10-cent drop puts ULSD at risk of snapping its record-setting 9 consecutive weeks of gains, even though the trend line that’s seen prices rally nearly $1/gallon during that time is still intact at the moment.  If we see a sustained move below $3.20 for ULSD, the charts suggest we could see another 10-20 cents of downside soon as a natural correction of this big rally, but if the $3.20 range support layers hold, the door is still open to rally north of $3.50 as we head into fall.

Gasoline prices meanwhile don’t look nearly as bullish on the charts, and there are only 3 trading days left before the last summer-spec futures contract of the year goes off the board and we start the winter gasoline season.  Both the technical and seasonal factors suggest that outside of a major supply disruption, it’s more likely we’ll see RBOB trading at $2.40 soon than it is we’ll see a run at $3.

Idalia is currently a category 1 hurricane and is expected to reach category 3 status before making landfall in Florida’s big bend region overnight.  Port Tampa Bay is still at risk of flooding from storm surge which is expected to be 4-7 feet in that area, but the latest path keeps the worst parts of the storm well away from major population centers and ports, which means the impacts on supply should be localized despite the dangerous nature of this storm.  Numerous ports in Florida and further east in the Gulf Coast have begun to limit operations as the storm passes and terminals in the area are expected to close around noon today. Non-essential personnel are being moved off of oil platforms in the Gulf of Mexico, but the storm is far enough east that it shouldn’t do any damage to production or refining assets.

The other type of storm in Tampa that’s been causing all sorts of headaches for suppliers attempting to top off tanks ahead of Idalia may require an EPA waiver to allow the contaminated product to be re-loaded onto ships and sent back to a refinery rather than attempting to truck out millions of gallons of transmix, which could take months given the location and looming demand for trucks in the wake of the hurricane.

Hurricane Franklin has reached Category 4 status in a reminder of what record warm water temperatures can produce as it moves north roughly 500 miles east of Jacksonville FL this morning but is hooking east and will stay far off shore. The NHC is tracking 2 other systems in the Atlantic, both given 50% odds of being named, but both looking like they’ll also stay out to sea.

The EPA issued a waiver for El Paso’s boutique 7.0lb RVP gasoline Monday, citing unplanned outages at the Alon Big Spring and Marathon El Paso refineries that have caused fuel shortages in recent weeks. The waiver allows for 9lb RVP gasoline, or 10lb RVP if blended with ethanol, through the end of the summer-grade season ending September 16.

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